tv Bloomberg West Bloomberg September 10, 2015 8:30pm-9:01pm EDT
perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. emily: square aims to go public by the end of the year. jack dorsey is ensuring people he will remain ceo, but what does it mean for twitter? i'm emily chang and this is "bloomberg west." what's so different about 2015 compared to 2000? i will talk about tech bubble fears. class box shares below ipo despite strong earnings. i will speak with erin leavy about what he still has to prove. and why businesses are depending so heavily on andreessen
horowitz backed technology to track their own access. first, to our lead -- square plans to hold its ipo in the fourth quarter of this year according to people with knowledge of the matter. so what is interesting about this news? timing. sources tell bloomberg that it's more contingent on market conditions. either way, we have learned he has no plans to leave his job at square despite an open ceo job at the other company he founded, twitter. here to help us answer these questions is our ipo reporter and a cofounder of button, a mobile platform or that has worked in the payments industry. alex, i'm going to start with you. what do you make of the fact that square is full speed ahead? does this have more to do with market conditions despite the volatility we have seen? alex: right now it seems to do
more with market conditions. bankers think financials are so good, that even if dorsey does not end up in the top spot square would still go public. , right now, we are going to watch market ability. the other thing to pay attention will obviously be what the fed has to say about interest rates and whether or not the investor community gets a little bit of certainty on what they are doing next. right now we are paying -- pegged at q4 and it seems all pistons are firing foursquare for a fourth quarter ipo. emily: there have been a lot of skeptics round square, but sources have told me the numbers are better than people think. is this company going to have a strong ipo? guest: i think based on what i understand of their fundamental economics in their core business, they've done a job getting margin that no one else
can in the small business segment in their core process, and that is tremendously impressive. i believe that bodes well for their ability to serve that customer segment with new products, and that is where i believe square's core growth opportunity is -- offering small businesses and increasingly large enterprises more services beyond payment processing, whether that be food delivering and ordering, lending, a host of acquisitions they have done recently. but the ability for them to generate better margins in their core business than other folks have traditionally been able to bodes well for their ability to serve that core segment that they are having a lot of excess in with better economics and -- success in with better economics and other folks are able to achieve. emily: that is interesting coming from you, you worked at google wallet. you worked at paypal. alex, what are we seeing when it comes to other private companies
and their appetite for ipos right now? i know you broke news about first data planning to go public. our other companies going ahead or are they postponing? alex: everything i'm hearing is october could be a busy month. depending on what happens with the market. everyone in september is going to be watching and waiting for some of those things we talked about. first data we broke yesterday, they are pushing for a $2.5 billion offering. as early as this month, according to my colleagues and i sources that would be the , biggest this year. the ipo market has been a little slow for 2015. that eating the biggest, it is still small for a u.s.-listed company. they are going to have to compete with the likes of a paypal running in this area as well. square has been trying to work its way up the food chain and find some of these higher-margin customers. emily: we have been talking
about square but the western -- question remains what is going to happen to twitter? i spoke to john kelly from "vanity fair" he said they begged dorsey to take the ceo job at twitter and he refused, apparently because of his obligations at square. take a listen to what john kelly told me. john: we learned at one point earlier this year, the board didn't just act dorsey to return, they begged him, quite literally. according to someone who was in the room. we are watching with bated breath to see what happens, but we can confirm he was asked to take the job at some point earlier this year. emily: do you think jack dorsey can do both jobs? mike: jack dorsey is an exceptional executive, a man incredible work ethic. if you have ever worked for a startup, there are folks who are 10 x in their ability to lead.
to have deep product insights no one else can have. it is clear from people i have spoken with that jack dorsey has that ability. he is a rare breed of executive. given his work ethic and deep product insight, i am optimistic he could do both jobs were that necessary. for square, square has a really good set of other executives who could run the business, but i believe jack is a product visionary and i think it is important he continues to lead square. emily: interesting. i think you are in the minority there. many experts i have in speaking to don't think it's a good idea for him to do both jobs. we still have to see. of buy and bloomberg's alex barinka, thank you both. now, a stock we are watching --
palo alto networks dropping after results from the software security company -- another cyber security saw -- stop we are watching, proof shares point. rising on the back of that were cast. we caught up with the true point ceo about the next generation of cyber security. >> the biggest factor of risk is e-mail. that's where hackers go and target individuals with enterprise. we are seeing social and mobile more as areas where organizations have left them vulnerable and are ultimately looking for better protection there. we are seeing a significant number of attacks focused on wire fraud. the fbi had an alert in that area because it was becoming so prevalent. we see organizations in the finance apartment being targeted and we see one level from dachshund down from executives, that are often times more vulnerable and probably more likely to click on a link that is malicious.
securityty is the landscape is so different, that the security posture has to be changed. they have two employed at generation technology to ensure they are well protected from this next generation of attacks. emily: up next, john callahan tells us where he sees the next big investment opportunity. ♪
that rocked silicon valley is officially over. ellen pao has announced she will not pursue an appeal against kleiner perkins. she explained her decision in a statement to "lumber request." -- statement to "bloomberg west." they did not reach an agreement to settle the dispute -- the dispute because you would have to remain silent about her experience. kleiner perkins has offered to forgo the legal fees if she drops the appeal. according to a person familiar with the matter, that still stands. however ellen pao said the last , she heard from kleiner was that they would not settle without a non-disparagement clause. she still intends to pay the fee. earlier this summer i spoke with a partner at kleiner who worked closely with ellen pao. >> i'm sorry that this happened to ellen, happen to us and the tech community. this isn't a question of guilt, it is a civil case, so is a question of liability. the jury found not liable, so it is not.
emily: moving on into venture capital world, john callahan is an early investor and founder of true ventures. he was one of the first two invest in fitbit, and is now on the companies toward. it so great to have you because we have in talking so much about startup valuations and what is going on in private tech. what do you think about valuations, are they sustainable? john: there's been so much conversation about high valuation in the late stage venture capital financing market but if anything, i'm here to say , venture capital is underinvested relative to the opportunity. emily: what do you mean by that? john: undervalued as an asset class. what is most exciting now and driving high expectations for unicorn companies is the in enormity of the markets we are investing behind. as an industry, we have never invested in markets is large.
-- this large. fundamental change is that the horizontal competing level, obviously mobile, cloud computing. likenk like -- but things wearables and thrown flat worms, these are large, horizontal, vast markets. at the same time you are having this wide-open playing field, you have what would refer to as deep verticals. what uber has done to transportation, what airbnb has been to hospitality, we are seeing that across enormous markets like health care, like healthcare services and fitness and wellness. emily: there are over a hundred unicorns valued at over $100 million. is that fair? a lot of these companies some people say are raising money on an idea they haven't even executed on. john: for sure there will be disappointments in the unicorns set. valuation is a combination of high expectation and financial performance.
not all the unicorns will have the performance necessary to exceed their private valuation. that is ok. venture capital is a small industry, roughly $50 billion the year invested in 2000 to 3000 companies. the world needs venture capital to take these risks and build companies. the reason is simple. we don't just build companies, we build industries. we build jobs and quite frankly, we build the future. the industry as a whole, unicorns are a tiny percentage of what is happening in venture capital and they are clustered around a few markets, predominately consumer tech and that. emily: you were in the thick of the last double. what is -- what makes this different would you say no , bubble right now? john: i don't think we are in a bubble. we are in a prolonged boom and
there will be highs and lows certain companies and segments. the difference is in the word fundamental. when companies work now, they work extremely well. the financial purser -- financial performance of even some of the smaller private companies we work with, when it works, it works insanely well from both a growth and margin than point. -- standpoint. it did not work that way in the last bubble. emily: let's take a look at fitbit. of peopleu make wearing an apple watch instead, and companies like jawbone which have raised and raised and are clearly struggling in the wearables space? my experience is that many people buy these things and then stopped wearing them. john: i'm an athlete and i love my fit bit. i think wearables is an example of an enormously large horizontal market. just to give you some sense of
scale, we have some fun with the fit bit numbers. as of march, fitbit users have taken 13 trillion steps -- 11 trips to jupiter. this is a great example of the vastness of these markets. we have never invested behind types of scale our startups are experiencing. emily: quickly, i know you are big on drones. why? john: we were the first investor in a commercial drones is is here based in berkeley. we think a great example of not only a huge horizontal market shift, bringing computing to all kinds of laces in agriculture and industrial applications, search and rescue, but think about every one of those markets -- data collection, sensor collection, the company is growing like crazy. every one of those markets, deep vertical. it is a very exciting time. emily: i have interviewed chris
anderson, the ceo of 3-d robotics. i have heard that side of the story. john callahan, founder of true ventures. thank you. a stock we are watching today -- vox. shares traded lower this night a -- despite an estimated forecast. box sees its revenue climbing in fiscal year 2015 and reported it topped 50,000 customers. i caught up with box ceo, aaron levie. aaron: you have seen the market begin to shift where even companies like emc which are large incumbents in the category are exiting our space because of the dominant position we have been able to create. we want to continue to invest in a growth but we did show some efficient the this quarter and -- improvement in efficiency in the sales this quarter.
sales market is about 70% of revenue. that was a pretty dramatic drop from 90 plus percent the same quarter last year. you will continue to see efficiency as the total customer base continues to grow. it is recurring revenue, so our growsthe customer base our sales and marketing dollars , focus primarily on new customers as well as up selling existing customers. versus simply just maintaining recurring customer base. as revenue grows, you will see improvements and efficiencies on this core operation costs. emily: the numbers are strong, but shares are below the ipo price. but the stock is down today. why is that? aaron: we have a lot of work to do to continue doing -- educate investors on our business model, what the size of the opportunity is where box differentiates, , this is something we are spending more time on -- we are going after a tens of billions of dollar industry, but that industry is in a dramatic amount of flux right now.
box is building the next iteration content management form, but that's the consolidation of storage infrastructure, content management software collaboration technology and we , need to continue to educate investors on what we are doing how we differentiate and why , customers can in you to spend -- continue to spend on box as their key platform and why we , have things like 70% gross margins. we are fundamentally in a differentiated software category, unlike what some people would think like storage or commodity infrastructure. emily: the lockup on shares was supposed to expire, as i understand it, after the quiet period listed. is that what is happening, are employees selling? aaron: the lockup expires next week, but the initial one expired in july. that was when outside investors and other investors and employees could sell. this is the first time insiders can sell. different investors have different points of view.
i'm personally not going to be selling anything. very focused on the long term of the company and we see a tremendous amount of growth going forward. emily: would you buy more shares at any point? aaron: if i can scrounge up the money, absolutely. emily: box ceo, aaron levie. we will be right back. ♪
world's top robotics to two shenzhen crisis. mobile analytics are a necessity for companies in silicon valley. -- top robotics industries in reported crisis. mobile analytics are a necessity for companies in silicon valley. one company has carved out a niche providing decision-making data. their tools tried everything from user engagement to sales. since the last time you were on the show, you are the first person mentioned in this big new yorker profile about mark andreessen. ultimately andreessen horowitz , investing the entire round. $865 million valuation because they think your promise is so big. the promise of mixed panels? guest: i think the first step for us is -- our goal is to provide data science to as many industries in the world as possible. when we raised our round, we
also released our page 10. we articulated the problems we wanted to solve. the promise being there are a number of industries that don't do a good job of quantifying information being data-driven. we think we can apply analytics to product, marketing, sales and finance. within companies. emily: one of the main things you track is engagement as opposed to just traffic. i was speaking about how well some of these companies are doing. are they seeing strong engagement? suhail: the funny thing about that is fitbit is actually a customer of ours. also.y and uber those companies, they are tracking exactly how people are using their applications and what people have found on mobile is that if people are engaging with their applications, they are coming back and using it again, that means their application is doing really well. these applications you can see , uber's valuation.
they are delivering on the promise that can get these people to interact with their apps. measuring engagement is the right measurement for these companies. emily: i recently spoke with mark andreessen on his views on startups, valuations and bubbles. take a listen to what he had to say. mark: i don't know if we have a headline, but it is be measured, be cautious, be careful. but also, invest in growth. we don't tell them to pull back if the stock market flips. if anything we tell them to push forward to take down the market. the companies that are doing well will do really well. emily: what is he telling you inside the boardroom? suhail: the reason we raised money, the entire reason was to grow rapidly. inside the boardroom, he is telling us we should lean in to whatever might happen in the economy. it turns out that even if something does happen in the economy, the money we are able to raise gives us the leeway to
hire the most amazing engineers through any kind of market. -- market dip. he is saying you should use the money we gave you to rapidly grow and dominate your own market, irrespective of whether the market is doing well or poorly. emily: your customers might be in a precarious position. how does that affect how you affect your business plan? suhail: we might go after small companies, but our goal is to own that entire set of segments. we diversify our business. our goal is to be able to own the entire set, we go up market and diversify. emily: thank you so much for joining us. read the profile on marc and -- mark andreessen. that does it for this edition. we will be back tomorrow. ♪ we live in a pick and choose world.
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